After the Justice Department released a slew of new documents linked to notorious sex offender Jeffrey Epstein, the journalists who dig them up found extensive connections to Silicon Valley.
TechCrunch’s Sean O’Kane looked into how a mysterious businessman named David Stern built a relationship with Epstein and made him invest in several electric vehicle startups, including Faraday Future, Lucid Motors and Canoo.
In the latest episode of the Equity podcast, Kirsten Korosec and I talk with Sean about what he’s learned and discuss whether the Epstein revelations will lead to broader consequences for Silicon Valley.
You can read a preview of our conversation, which has been edited for length and clarity, in the transcript below.
Sean: There are always people on the fringes who don’t necessarily want to be front and center in the investment scene. And that’s why I started looking through those archives, partly because a long time ago, going back 10 years ago especially on my beat, there was just a ton of Chinese investment in the space.
This was before even the rush of EV startups in China that we see today […] In autonomous vehicles, but especially electric vehicles, there was this moment where Chinese investors and Chinese companies, state-owned automakers, all they wanted to do was look like Silicon Valley startups. So they came here and invested in companies and helped them start up, or in some cases even set up offices in Silicon Valley.
And it’s in this environment that many of the companies I’ve covered for a long time emerged. There has never been a complete picture of how many of them were financed.
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One in particular, this company called Canoo, which is now bankrupt and out of business, had perhaps the most mysterious set of investors of all. They really weren’t upfront about it when they first came out of hiding in early 2018. And frankly it took until there was a lawsuit between some people who were running the company near the top and the investors were revealed.
At that time, he was this businessman in China who was relatively connected, the son-in-law of the former as the fourth-highest CCP official under the previous leader of China and a huge electronics magnate from Taiwan. And then there was this really weird guy named David Stern, who was the third founding investor. And there was so little information about this guy.
I could tell, then, that he was some kind of German businessman, that he had some connections to China, but it wasn’t really clear how he got involved. The only thing I really remember hearing at the time was that he was close with Prince Andrew, which I found very strange, this idea that someone had told me a long time ago, probably in 2018 or 2019, that Prince Andrew was involved with this Canoo company in some way, maybe not investing, but advising or something.
It was something that stayed in my mind for a long time, obviously, because I looked for this information as more of these files came out, assuming that proximity to Prince Andrew meant proximity to someone like Epstein.
And that was the case here, more than I could have imagined, because this Stern guy went from being an enigma or a ghost to someone who was present in this whole negotiation 10 years ago, where we see him investing in Faraday Future over a period of about a year and a half, trying to get Epstein to buy this company for $300,000,000. Future’s founder had bought or acquired the arrival of Lucid Motors at the time, which I feel is an overlooked dynamic [in] how those companies grew back then — and then also at Canoo.
Epstein never invested in any of these companies despite the proximity, but it was such a revelation. And I get into that in the story I wrote last week, but we get this sweep of a decade-long relationship that Stern had with Epstein when he first approached him in 2008, hat in hand and introduced himself and said, “Hey, I want to invest in China. Will you throw in some money?” to be someone who was seemingly very close to him until the end.
Kirsten: The whole thing is really interesting and goes back to my initial comments about how sometimes when you have a chance to look back with new information on how the deals were going, it really changes your perception and perspective on the era.
And for those who haven’t followed the quote-unquote “mobility” bandwagon, consider how we think about physical AI these days. Everyone was talking about it. Every car manufacturer wanted to have a piece of the offer “the future of transport” or “mobility”. And so it makes perfect sense that some of these more secretive guys would jump in as well.
Sean, one of the points you made to me as I was working on the story with you, in terms of editing it, was [saying]it was very clear that Epstein and David Stern were not really in the business of investing and building companies. It was all about how to make the most money as quickly as possible. And that, I think, is really historically important and interesting and gives you a little insight into – in addition to all the horrible, horrible, terrible things that he did to people, [Epstein] he was also a complete manipulator, out to make money as fast as possible. And you see it in these emails and the exchanges between David Stern and Epstein.
Sean: Yeah, at both of those points really, I open the story with a moment in time where Lucid Motors […] They were basically a battery supplier for a long time and then they turned to starting passenger vehicles as we know them today, but they were really struggling to grow their D series at the time and they really needed that money to start production of their first electric sedan.
They were struggling, largely behind the scenes, because the founder of Arrival had quietly amassed this significant stake and kind of pushed people away and made it look like a non-investment company in some ways, but the hype around all of that at the time created opportunities for people like Stern and Epstein, and we see them talking in these emails. Can you get information from Morgan Stanley?’
Epstein turns around and relays that information back, and then you see this conversation about, okay, well, Morgan Stanley is saying that Ford—which was reported at the time—had a kind of investment offer, possible takeover offer, on the table for Lucid Motors [and] It was going to come in that Series D. And they cut — do we invest in it and maybe get a big return down the road? Or is it something we sell as Ford comes a few months later if we can get that share now at sale prices?
Ultimately, they didn’t make it, but Stern eventually invested in Canoo and helped launch that company.
Anthony: One thing—perhaps stepping back a little bit from the specific industries or investments—is also an important context that’s generally brought up in any of these stories about Epstein in Silicon Valley, but it’s worth repeating here, is that [pleaded] guilty of soliciting prostitution of a minor in 2008.
Almost all the emails we talk about with these stories [and] almost any other story about Epstein in Silicon Valley comes after that. It’s also partly a story about how people get comfortable with the idea that, okay, this guy already has a pretty shady past. He wasn’t the notorious criminal after all [became]but there were things that were already known about him, and because he was a source of connections with power, with famous names, with money, many people were willing to overcome it.
